Point Judith Capital Blog
Sean Marsh, Co-Founder and General Partner of Point Judith Capital, was featured in Keith Cline’s Investor Q&A on VentureFizz. Click here to read the full interview.
The Internet and SaaS technology companies have dramatically changed the process of recruiting new employees for companies of all sizes. This is a statement that, on its face, seems obvious given that most job seekers have used some form of website to find a job in the past 15 years.
What is fascinating to me is how unique and distinct this ecosystem is from the broader Internet media and enterprise SaaS worlds. Indeed is the de-facto search engine for jobs, not Google. LinkedIn is the de-facto social network and recruiting platform for jobs, not Facebook. Glassdoor is the de-facto employer review site, not Yelp. Success Factors and Taleo are the de-facto enterprise recruiting and human capital optimization platforms, not Salesforce.
Highly capital efficient, high growth, successful companies seem to have become extremely rare in the age of the Unicorn.
The fabled Unicorns that have become the symbol of both success and excess in the venture capital markets mostly have big burn rates and thus are voracious consumers of venture capital and venture debt capital.
Building a startup is hard. Nearly every stakeholder in the startup ecosystem would agree with this from founders and employees to board members and investors. But building a startup is not the only hard thing in life. School is hard, relationships are hard, athletics are hard, parenting is hard, and professional careers outside of entrepreneurship are hard, too. The doubters in this world only make all of it harder.
For all you basketball fans out there you already know that Steph Curry was named the MVP of the NBA. What you may not know is what an exemplary person he is and the incredible journey he has been on to become the MVP. I didn’t know a lot about Steph until CoachUp partnered with him to bring a lot of the ingredients of his success, both on and off the court, to young athletes across the country. It is worth watching Steph’s acceptance speech. He attributes his success to the following factors:
As I happily consume the Patriots post Super Bowl media bonanza, I am struck by the depth of Julian Edelman that goes beyond his amazing athletic talent. What is even more impressive to me is his mental toughness and incredible intensity and focus which has enabled him to overcome a lot of perceived hurdles. He attributes a lot of this tenacity and never say die attitude to his dad who he describes as his life long coach and mentor. That is a critical role for a father to play and it is even more critical for kids to have a coach and a mentor that is not just focused on athletic achievement but also on life achievement.
Since Ticketmaster acquired Ticketsnow in 2008 and essentially turned the primary and secondary ticket markets into a duopoly with Stubhub, trying to innovate in the sports and events tickets market has been fraught with peril. Ticketfly has done a lot of exciting work in this time but the majority of their customers are small to mid-size venues. The event arena has seen better outcomes with Cvent, Eventbrite, Lanyon and others gaining substantial traction and scale.
I commented on a piece recently in the Boston Business Journal regarding what successful entrepreneurs and technology executives are doing with their wealth and how this impacts the Boston technology and business ecosystem. Interest in this area has likely increased as there have been some outstanding technology liquidity events in Boston since the 2000/2001 bubble burst that have been chronicled by Jeff Bussgang and others in a number of places.
I had fun in college. I also had fun last weekend at the Nantucket Conference.
The similarities between the two don’t end there. Like college, the Nantucket Conference is full of extremely intelligent professors who teach extraordinary things at a pace that makes your brain hurt. At this year’s event, the professors included: Brent Grinna, Scott Savitz, David Cancel, Cory von Wallenstein, Piet Morgan, Chad Dickerson, Eric Hellweg, David Aronoff, David Chang, David S. Rose, David Tisch, Spencer Ante, Neil Blumenthal, Larry Bohn, John West, Gail Goodman, Jon Oringer, David Skok, David Rose, Hayley Barna, Prat Vemana, Rudina Seseri, Mike Baker, Dulcie Madden, Slava Rubin, Scott Kirsner, Eric Paley, Janet Holian.
There has been a lot of buzz within the past few days around Google’s $3.2 billion acquisition of Nest Labs – and rightfully so. In less than 4 years, Nest has revolutionized the way we think about our homes. With their first product, the Nest Learning Thermostat, and more recently, with the Nest Protect smoke and carbon monoxide alarm, Nest has found a way to make devices that were previously ignored into something people get excited about. Founders, Tony Fadell and Matt Rogers, took a page from their work at Apple and turned your household thermostat and smoke detector into sleek, internet-connected devices that can be controlled by your smartphone.
Do you remember your job search in college without LinkedIn or the Internet for that matter (I know, anyone under 40 didn’t have this experience)? At my alma mater (Bowdoin College, way up north on the Maine coast) not a lot of companies came to campus and there were no startups or tech companies to be found. Eventually, I found my way into Internet startups but it took a few years and required spending some time in New York and then Boston to get immersed in the scene.
Today is an exciting day for Point Judith Capital as we continue to expand our universe of entrepreneurs. It is specifically meaningful for me as today is the first time we have backed an entrepreneur from my alma mater, Bowdoin College. We have funded many entrepreneurs from Columbia, MIT, Harvard, Stanford, etc. and there are many great Bowdoin entrepreneurs I know that we would like to fund, but timing and circumstances have not aligned until now.
Sunday was my 5-year-old twins’ birthday party. They had 20 of their friends to a local gym to play and eat cake. I didn’t think much about it until we went home and the kids started un-wrapping their gifts………then I did some math, and the scale of my twins’ impact on commerce for their 5th birthdays hit me hard.
Do you love startups? Is your life run by technology and are you an early adopter of all things Internet and mobile? Are you excited about being a part of the next generation of great Boston area Internet and software companies? Are you a connector who loves to go to every event listed on Greenhorn Connect and stay out late with other technophiles? If you answered “yes” to these questions, then we might be a great place for you. At Point Judith, we have dedicated ourselves to partnering with innovative entrepreneurs to build transformational companies. We are hiring an associate to work with our team on all facets of our business.
Global ecommerce sales topped $1 trillion for the first time in 2012 and the outlook for growth remains robust at over 18% per year, a huge milestone for the Internet and the shift of purchasing to the web. As exciting is the fact that this still represents less than 15% of total retail spending meaning there is a lot of potential growth ahead. However, for the past few years as I have sat in board meetings and partner meetings discussing our portfolio companies in the ecommerce and online transaction arenas and I continue to wonder why conversion rates of consumer web traffic to purchasing customers remains at levels that seem low. To be sure, the industry and our portfolio companies have done a lot to increase conversion rates from ~1% to levels closer to 3% – 4%, and the industry heavyweights have achieved even greater conversion rates with Amazon now north of 16%, but a lot of data I have seen is the retail conversion rates, on average across all categories, convert visitors to purchasers at a rate that is more than 20%………almost 10x the rate of the ecommerce average. I have been bouncing this idea off of entrepreneurs, other VCs and our investors (limited partners) for a few years. I have gotten pretty consistent agreement that this is both a conundrum and a big opportunity. In fact, if ecommerce conversion rates were the same as retail, that would mean an increase in ecommerce revenue of $10 TRILLION…….of course this is somewhat overstated but it clearly makes the point that this issue is HUGE.
Imagine the designers of the iPod and the iPhone decided to re-imagine the home thermostat. Now imagine that home thermostats become programmable and intelligent through your smartphone. Now imagine this elegant, smart and energy efficient thermostat is paired with the leading consumer Internet utility management solution so every home owner in the world can measure, manage and optimize their energy use and have a lot of fun doing it.
You don’t need to imagine this anymore because today it has become a reality!
We are thrilled to announce that our portfolio company, MyEnergy, has combined forces with Nest Labs. Home automation and energy management innovation have never seen what is about to happen next. Home owners will understand their energy use like never before and be able to use it intelligently and proactively. Nest and MyEnergy are leading this revolution and we are excited to have a front row seat in this epic feature that will radically change the way we consume and think about energy.
Click here to read the entire press release.
By David J. Martirano
We are excited to announce that Nabsys, a Point Judith Capital portfolio company which is dedicated to enabling advances in life sciences and healthcare through strategic deployment of its novel positional sequencing platform with broad applicability for DNA analysis, recently completed a Series D round of financing. The round was led by Bay City Capital, a leader in backing the most innovative life sciences companies. Bay City invested in Ion Torrent, a semiconductor-based short-read DNA sequencing company acquired by Life Technologies in 2010 for $725M. This remains the largest exit in the space to date. Nabsys is advancing the cause of semiconductor-based genomic analysis for the first time, applying it to individual DNA molecules rather than the large groups of amplified molecules required by Ion Torrent. By avoiding amplification, Nabsys is able to analyze molecules that are very large compared to those routinely analyzed by existing DNA sequencing technology. This allows Nabsys to obtain structural information that cannot be seen using many other technologies. In other words, Nabsys is able to find where in a genome sequences are located, hence the name positional sequencing. This information is largely absent from the data sets produced by the leading DNA sequencing technologies but is critically important for a full understanding of cancer and other diseases where genetic rearrangements play a major role. We are excited to welcome Bay City to the team to help us work towards this vision. Read more>>
I was reading in Xconomy yesterday the Taylor Yates description of his trek to Silicon Valley with his MIT Sloan classmates and I couldn’t resist sharing with the Boston community a recent trek to the Boston tech community that I led for my alma mater, Bowdoin College.
This is the second year that we have run the Bowdoin to Boston Trek and in 2011 and 2012 we have had the opportunity to get 45 Bowdoin students on a bus in Brunswick, ME and bring them to Boston to showcase the technology and entrepreneurial opportunities available to undergrads (including tech heavy/CS roles as well as marketing/sales/customer support, etc.).
While it is likely that 2013 will be a year of reckoning for many seed funded companies, I think the most important point about the so-called “Series A Crunch” was recently made by Fred Wilson of USV:
“At the stage where you are past hopes and dreams, where you have customers, revenue, and a real business, but have not yet reached “true success”, there just aren’t many investors to choose from.”
He goes on to affirm their willingness and interest in leading inside rounds and seeing companies through the “in between phase”.
Jack Dorsey wrote a great piece about reconsidering the term “user” in the Internet ecosystem. I applaud this. “User” has become problematic because it is no longer sufficiently descriptive to have substantive value and contributes to confusion, as well. We review hundreds of new investment opportunities per year and the description by many companies of their “users” is always an area we have to parse very carefully. Is a “user” someone who pays? What does a “user” have to do to be considered a “user” (just visit the site, register with an email and password, take any specific action, etc.)?
This recent article from the Wall Street Journal suggests that there is a “Venture Capital Secret: 3 out of 4 start-ups fail”. Failure, however, is defined as not returning the invested capital from the venture capitalists (as opposed to building innovative products, hiring a lot of employees, achieving an IPO, etc.). While I am a venture capitalist and I certainly don’t like investments where we don’t at least get our money back, this test does not reflect true failure of a startup (ie: goes out of business), but more a failure of the financing strategy (too much capital or shares priced too high). What the headline should read is “The Venture Capital Secret: 3 out of 4 Investments Fail”, in many cases the actual startup might succeed on other important measures but the venture capitalist may not make a profit. From an industry standpoint, especially given the time frame of the data set, this does not surprise me.
Being the founder and CEO of an early stage cleantech company, I am often asked what the most difficult part of my job is. Before launching Retroficiency, I presumed it would be identifying a large opportunity or building a great product. But having watched my company grow from 2 to 23 employees, I realized the most significant challenge has been and will continue to be building a winning culture. Without a great culture that is configured to continually identify and attack large opportunities or develop groundbreaking products, everything else is irrelevant.
This post originally appeared on Business Insider and was written by Sean Marsh (@seanmmarsh), Point Judith Co-founder and General Partner, and Eric Ahlgren, Point Judith Summer Associate and MIT Sloan Class of 2013.
There has been a lot of negativity about venture capital, venture backed exits and IPOs lately, which is not surprising in light of the high profile declines in some of the big venture backed IPOs including Facebook, Zynga, Groupon, A123, etc.
However, at Point Judith our experience has been different and based on 6 exits in our portfolios over the past four years including the successful sale of Fidelis to General Dynamics at the end of August, my intuition is that the venture liquidity market is quite robust. So I decided to see if the numbers told the same tale of woe as the media pundits.
I spent the last two days with 2,800 awesome marketing ninjas from around the world, listening to phenomenal marketers like Gary Vaynerchuck and having beers with Mike Volpe who I think is one of the top SaaS CMOs in the country.
Here is what I learned:
In the wake of the Pinterest round valuing the company at $1.5B from the Japanese ecommerce giant Rakuten, it is hard not to notice that social and ecommerce have become inextricably linked in a way that is on the minds of some of the leading innovators on the Internet.
At Point Judith, we are very excited about the opportunity to fund entrepreneurs who are building social ecommerce sites that provide seamless social integration and leverage to their users. We were investors in Multiply, which is the largest social ecommerce platform in SE Asia and was acquired by Naspers (a $20B global ecommerce player). We also recently led the Seed round for Kitsy Lane, which has already launched a very exciting social shopping platform that gives women a way to start their own online boutique and sell items they love (jewelry, accessories) to their friends by leveraging their Facebook social graph, their Twitter followers and their Pinterest followers. In each of these cases, the site was built to serve the needs of the consumer who wants to buy and sell with their friends in a socially fun and efficient way. Read more>>
A venture capital firm’s reputation and by extension its brand is shaped and defined by a few critical components including: (i) The Entrepreneurs (the stature and profile of the entrepreneurs that the firm has backed); (ii) The Companies (the successful companies in which the firm has invested); and (iii) the Partners (their industry and entrepreneurial experience along with their knowledge and value add they bring to portfolio companies). Strong venture capital brands attract the best entrepreneurs who then build the best companies which creates a virtuous cycle for the venture capital firm and it’s brand. Read more>>
There is a very interesting article on Venturebeat by Glenn Solomon with a great graphic produced by Cowen and Company that separates public Internet companies by growth and profitability (see below).
Essentially it shows that there are very few companies growing revenue at over 30% per year that also have greater than 30% EBITDA margins and the 6 companies that fit in this category are all outside the US (Russia, China and Latin America). One of these companies, Yandex, was a company we invested in 11 years ago when the company raised its Series A round. Today it is the largest search engine in Russia and completed its IPO in June at an $8 billion valuation.
Zillow priced their IPO yesterday and began trading today. Zillow increased their pricing range during their roadshow and then priced above the range at $20 per share and ended the day at $35.77 per share (valuing the company at $540 million when they priced and closing the day at $960 million). This is a great start for the first Internet company with run-rate revenues of less than $50 million to go public in a long time (with the exception of Jiayuan (NASDAQ: DATE) which did go public with a $50 million run rate but likely was able to price successfully due to its Chinese market focus). I remember the first IPO of a company I had invested in 1997. The company was Andover.Net (NASDAQ: ANDN), it went public in late 1999 with $5 million in revenue (it priced its IPO at $270 million). It is interesting to compare the relative revenue multiples of these, the company from the first Internet wave valued at 54x revenue, the second company from the current Internet IPO wave priced its IPO at 12x revenue. Read more>>
It is extraordinary to think about the recent events in Egypt and the catalyzing impact of both Facebook and Twitter. Not only is it amazing to see people organizing and communicating through new methods on mobile devices, but these services are delivered by companies in the US that are less than a decade old. Read more>>
Last week was proclaimed as National Entrepreneur Week by our President and Friday, November 19th, was National Entrepreneurs’ Day. When I read this, I asked myself the question “So, where do you go to school to become an entrepreneur?” Read more>>
I was reading Scott Kirsner’s recent article Innovation Month: What’s It To You and when I read his request for bloggers to “write a post about some initiative, dynamic or group that you feel is vital to innovation in the region” it reminded me of a presentation I gave a few weeks back to the 128 Innovation Capital Group specifically on a sector in our region that is driving innovation and real value. The title of my presentation was “Mobile Innovation in Boston / New England, Entrepreneurial Opportunities for the Future.” Read more>>
I attended the PE Hub Shindig last night which was organized and led by the well known Dan Primack and sponsored by .406 Ventures, Second Market, Atlas Ventures, Capital Dynamics and Velocity Financial. I had to take a rather circuitous route into Boston because half of the east / west roads around Boston have been flooded out so I showed up a little late.
With all the talk of the coming tech IPOs and the inclusion of Gilt on most of these lists, I was prompted to reflect on the ecommerce sector on the East Coast. Many of the mega success stories of ecommerce over the past decade are on the West Coast, including such notable pioneers as Amazon, eBay and Netflix. What I find incredibly interesting, however, is the number of big and successful ecommerce companies located in the Northeast. Priceline, Vistaprint, and others were conceived, started and grown by talented East Coast entrepreneurs into multi-billion dollar market leaders. Read more>>
I recently attended the very informative and expansive McGraw Hill Media Conference and there was a lot of discussion about the challenges facing the advertising market (both traditional and digital). Certainly there is a secular shift afoot from traditional to digital media and the time spent on digital media relative to the ad dollars flowing there are mismatched. There are many reasons for this that I won’t delve into and I firmly believe the secular shift will continue growing digital media into a much larger industry than it is today. However, one area that I continue to be intrigued by is the subscription model where the consumer pays for the value they derive from spending time with a digital media solution (rather than paying for it by watching ads).
We all know that The Red Sox, The Patriots, and The Celtics are examples of successful leadership that has arisen from New England, but another New England super star is its Communications Infrastructure sector. The New England entrepreneurial ecosystem has long been identified with communications equipment, storage, life sciences and software. However, a somewhat less visible, but equally robust segment of our innovation fabric is the Communications Infrastructure cluster. These are the companies that build, own and operate the critical communications network infrastructure that enable today’s modern Internet, voice and mobile communications services. These are companies operating everything from wireless towers to cable systems to telephone / data networks to CDNs (content delivery networks). Read more>>